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Will Healthy Revenue Growth Boost HubSpot (HUBS) Q2 Earnings?
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HubSpot, Inc. (HUBS - Free Report) is scheduled to report second-quarter 2023 results on Aug 2, after the closing bell. In the last reported quarter, the company reported an earnings surprise of 44.58%. It pulled off a trailing four-quarter earnings surprise of 28.98%, on average.
The company is expected to report higher revenues year over year, backed by growing customer proliferation for its marketing and sales applications and initiatives to integrate advanced AI capabilities into its software solutions.
Factors at Play
HubSpot is benefiting from increasing customer engagement, accelerated product innovation and its unique strategy to gain momentum in different market segments. Strength in free sign-ups and pricing optimization in the starter edition is working well to attract customers from the lower end of the market.
On the other hand, premium customers are mainly looking for a unified solution that provides complete visibility throughout their entire customer journey while also ensuring cost efficiency. HubSpot connected platform is capable of fulfilling both aspects. This bimodal strategy of focusing on volume in the lower market and offering greater value in the upper market is likely to have had a positive impact on customer growth and achieve favorable results in the second quarter.
The company is placing a strong emphasis on incorporating generative AI in its CRM (customer relationship management) platform to augment the effectiveness of enterprises’ sales and marketing teams. The AI integration will enable sales and marketing professionals to compose better prospecting e-mails and provide more relevant insights for their clients. Service professionals can leverage generative AI capabilities to better anticipate customer requirements, suggest resolutions and offer proactive support. Such initiatives are likely to have supported sales growth during the quarter.
During the quarter, HubSpot unveiled Connect4 to enhance workforce efficiency in a hybrid working environment. The company is aiming to innovate its hybrid business model by developing greater connection among its employees and driving equity and sustainability within the organization. This is likely to have boosted productivity and supported the top line during the quarter.
Our estimate for subscription revenues is pegged at $492.4 million, suggesting 19.4% year-over-year growth. Our estimate for professional service and other revenues is pegged at $11.4 million, indicating an improvement from the $9.4 million reported in the year-ago quarter.
Per our estimate, the total number of customers is expected to be 186,926, indicating 23.9% year-over-year growth. Our estimate for average subscription revenues per year is pegged at $11.9, suggesting 6.5% year-over-year growth.
For the June quarter, the Zacks Consensus Estimate for total revenues is pegged at $504 million, indicating an increase from the year-ago quarter’s reported figure of $422 million. The consensus estimate for adjusted earnings per share is pegged at 99 cents, representing a more than two-fold rise from 44 cents reported in the prior year.
Earnings Whispers
Our proven model does not predict an earnings beat for HubSpot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 99 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Motorola Solutions, Inc. (MSI - Free Report) has an Earnings ESP of +0.07% and carries a Zacks Rank of 2. The company is set to report quarterly numbers on Aug 3.
Toyota Motor Corporation (TM - Free Report) has an Earnings ESP of +12.64% and sports a Zacks Rank of 1. The company is set to report quarterly numbers on Aug 3.
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Will Healthy Revenue Growth Boost HubSpot (HUBS) Q2 Earnings?
HubSpot, Inc. (HUBS - Free Report) is scheduled to report second-quarter 2023 results on Aug 2, after the closing bell. In the last reported quarter, the company reported an earnings surprise of 44.58%. It pulled off a trailing four-quarter earnings surprise of 28.98%, on average.
The company is expected to report higher revenues year over year, backed by growing customer proliferation for its marketing and sales applications and initiatives to integrate advanced AI capabilities into its software solutions.
Factors at Play
HubSpot is benefiting from increasing customer engagement, accelerated product innovation and its unique strategy to gain momentum in different market segments. Strength in free sign-ups and pricing optimization in the starter edition is working well to attract customers from the lower end of the market.
On the other hand, premium customers are mainly looking for a unified solution that provides complete visibility throughout their entire customer journey while also ensuring cost efficiency. HubSpot connected platform is capable of fulfilling both aspects. This bimodal strategy of focusing on volume in the lower market and offering greater value in the upper market is likely to have had a positive impact on customer growth and achieve favorable results in the second quarter.
The company is placing a strong emphasis on incorporating generative AI in its CRM (customer relationship management) platform to augment the effectiveness of enterprises’ sales and marketing teams. The AI integration will enable sales and marketing professionals to compose better prospecting e-mails and provide more relevant insights for their clients. Service professionals can leverage generative AI capabilities to better anticipate customer requirements, suggest resolutions and offer proactive support. Such initiatives are likely to have supported sales growth during the quarter.
During the quarter, HubSpot unveiled Connect4 to enhance workforce efficiency in a hybrid working environment. The company is aiming to innovate its hybrid business model by developing greater connection among its employees and driving equity and sustainability within the organization. This is likely to have boosted productivity and supported the top line during the quarter.
Our estimate for subscription revenues is pegged at $492.4 million, suggesting 19.4% year-over-year growth. Our estimate for professional service and other revenues is pegged at $11.4 million, indicating an improvement from the $9.4 million reported in the year-ago quarter.
Per our estimate, the total number of customers is expected to be 186,926, indicating 23.9% year-over-year growth. Our estimate for average subscription revenues per year is pegged at $11.9, suggesting 6.5% year-over-year growth.
For the June quarter, the Zacks Consensus Estimate for total revenues is pegged at $504 million, indicating an increase from the year-ago quarter’s reported figure of $422 million. The consensus estimate for adjusted earnings per share is pegged at 99 cents, representing a more than two-fold rise from 44 cents reported in the prior year.
Earnings Whispers
Our proven model does not predict an earnings beat for HubSpot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 99 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
HubSpot, Inc. Price and EPS Surprise
HubSpot, Inc. price-eps-surprise | HubSpot, Inc. Quote
Zacks Rank: HubSpot currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post a beat this season:
QUALCOMM Incorporated (QCOM - Free Report) is set to release quarterly numbers on Aug 2. It has an Earnings ESP of +3.68% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Motorola Solutions, Inc. (MSI - Free Report) has an Earnings ESP of +0.07% and carries a Zacks Rank of 2. The company is set to report quarterly numbers on Aug 3.
Toyota Motor Corporation (TM - Free Report) has an Earnings ESP of +12.64% and sports a Zacks Rank of 1. The company is set to report quarterly numbers on Aug 3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.